Commercial Building Retrofits Could Save $41B a Year, Study Says

Commercial Building Retrofits Could Save $41B a Year, Study Says

Owners of commercial buildings in the U.S. could save more than $41 billion a year in energy costs, if all currently existing commercial space were placed in a decade-long energy efficiency retrofit program requiring an annual investment of about $22.5 billion, according to a new report by Pike Research.

The report by the cleantech market intelligence firm acknowledges that while the figures are impressive, they reflect the market potential for energy efficiency retrofits -- rather than the actual market, which under current conditions is a fraction of the potential.

"The building retrofit industry faces a number of key challenges," Pike Managing Director Clint Wheelock said in a statement accompanying the release of the report last week. "The current financial crisis has had a significant dampening effect on property owners' investments in their properties. Financing for such projects is scarce, and the limited investment in building efficiency is not keeping pace with the growing national demand for energy."

Private commercial buildings present the largest untapped opportunity for energy efficiency retrofits and account for nearly all existing commercial space, the research firm noted. In contrast, federal non-industrial buildings comprise less than 3 percent of existing commercial space, but major retrofits in federal facilities and other institutional buildings are far more likely to receive funding than projects outside the sector.

The Pike study, "Energy Efficiency Retrofits for Commercial and Public Buildings," examines market drivers, barriers and scenarios that could contribute to the market reaching its potential -- and those that would impede it if left unaddressed.

The report said:

"If the goal of the energy retrofit industry is to spend a little money on efficiency, while total national demand for energy continues to grow, then present policy is functioning well. However, if the goal is to reduce the total demand for energy in buildings over time, by the 50 percent or more needed to address international competitiveness, global warming, and energy independence, then present energy policy needs a substantial retrofit.

If code policy, design tools, financial incentives, and regulations focus on energy efficiency at the following intervention points [as identified by nonprofit research organization Architecture 2030], the incremental cost of efficiency will be very small:


  • 'Building design – schematic design, material and building systems selection
  • Existing building purchases
  • Leasing/tenant improvements
  • Building renovation cycles
  • Rebuilding (after a natural disaster)'

Programs that do not recognize these intervention points or take advantage of them face unnecessary obstacles, costs, and potential failure. A national carbon trading system could have a major effect on the retrofit market. If national carbon-emissions legislation addressed energy use in commercial buildings with a combination of high energy prices and reinvested incentives, then the market for energy efficiency retrofits (and for educating the workers in this market) would explode with activity."

The executive summary of report is available for free download from Pike Research. The full report is available for a fee.

Image of 300 West Sixth Street, named one of BOMA's Outstanding Buildings for 2010, courtesy of the Thomas Property Group.